Interaction with State Programs

Interaction with State Programs Laser Talk

Question:  How can a Federal carbon price be reconciled with existing state programs?

Answer:  There are two ways to reconcile Federal legislation with existing state programs such as the Regional Greenhouse Gas Initiative [1] or the California Cap and Trade program [2].

First, stacking, which means the state and federal programs would both continue independently for some period; and second, integration, where the two programs would be merged in some way that is negotiated between the state and federal governments.

As of 2021, all existing state-level carbon pricing programs in the U.S. are emissions trading systems (ETS). There are examples around the world where carbon taxes and emissions trading are both used in the same jurisdiction to complement each other. [3,4] These examples can provide guidance if necessary.

CCL strongly recommends the clarity of a nationally uniform carbon fee, but the existence of existing state or regional ETS programs need not stand in the way of passing national legislation. CCL’s view is that stacking is the most suitable option.

In a Nutshell: A national carbon fee should not preempt of supersede any State law or regulation that also promotes decarbonization of our economy. CCL’s view is that the most suitable way to achieve this is for the federal program to be “stacked” on top of any existing State-level emissions reduction program, such as emissions trading, as long as the State chooses to continue its own program.

  1. “Regional Greenhouse Gas Initiative.” RGGI, Inc.
  2. “California Cap and Trade.” Center for Climate and Energy Solutions.
  3. “State and Trends of Carbon Pricing 2021.” Publ. World Bank Group, Washington, DC. (May 2021).
  4. “Emissions trading systems and their linking: challenges and opportunities in Asia and the Pacific.” Asian Development Bank (2016).

This page was last updated on 12/04/21 at 23:44 CST.